After suffering the pain of a severe correction for more
than a month, global equity markets are finally showing
signs of a major pull back. Equity markets across the
globe were in a highly oversold position and traders rushed
to cover their short positions on the first signs of a
Asian markets closed with gains yesterday and Europe followed
suit. Major European indices closed more than 2 per cent
each higher while Russia gained more than 5 per cent.
Helped by some statements from the US Fed chairman, US
indices surged yesterday to close with their best single
day gains in more than two years.
Morgan Stanley Capital International (MSCI) World Index,
which tracks major equity markets across the globe, had
its biggest single day gain in more than two years yesterday.
a public speech, Fed chairman Ben Bernanke sounded less
concerned about inflation than earlier this month when
he termed current US inflation rates as 'unwelcome'. He
also said the US economy could withstand the negative
impact of high oil prices.
results indicated that new factory orders increased the
fastest in many years in the US even though factory output
showed a decline for the month of May. An unexpected drop
in unemployment claims indicated a strong labour market.
These helped ease concerns about a major slow down in
the US economy.
Dow index climbed back above 11000 and closed with gains
of 1.8 per cent. NASDAQ, the worst performer among frontline
US indices this year, soared 2.8 per cent.
Asian indices have opened with significant gains. Malaysia
and South Korea have gained more than 3.5 per cent each.
Japan has bounced back more than 3 per cent and the Nikkei
index is closing in on 15000.
has added more than 2.5 per cent and Hong Kong is trading
higher by more than 2 per cent. Shanghai, which was the
least affected in this round of correction, has gained
over 1.5 per cent.